Reimagining Capitalism: Nation Readers Respond

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June 17, 2011

“If you had the ability to reinvent American capitalism, where would you start?” That was the question The Nation posed to sixteen activists and thinkers for our special issue on “Reimagining Capitalism.” When we invited readers to submit their own answers, we were pleasantly surprised at how many responses came pouring in.

Below is an edited selection of these reader proposals, which we will be updating and expanding over the next several weeks. Brilliant, fresh and driven by a deep desire to broaden the terms of our national debate, the ideas here confirm that the true solutions to our economic crisis are readily at hand. The challenge, then, is to persuade our leaders in Washington to get to work.

Proposals for July 11:

Karl Eysenbach (Eugene, OR): Just as a ruined castle can be recycled and turned to better use, so we might think about transforming the military-industrial complex into an environmental-industrial complex. God knows that global warming isn’t getting any better, and at least some very knowledgeable scientists predict that climate change could hit with an evil wallop sooner than many people think. Boeing, Rockwell, E E & G, Blackwater, etc. may have what it takes to save the planet if reconfigured correctly in the midst of the next economic crisis. What better thing to do than turn all of that technological infrastructure around into retooling for solar, wind, geothermal or other sources of alternative low/no carbon power?

Martin Maudal (Claremont, CA): We need a sort of corporate Hippocratic oath required before granting a corporate charter: First, do no harm; second, serve the common good; third, obey all laws; fourth, and only after fulfilling the first three requirements, earn a profit for your shareholders. If we could somehow inspire state attorneys general to take back their right to grant and revoke corporate charters based on the public good, it’d be great!

Patricia O’Malley (Pittsburgh, PA): Most Americans can’t define capitalism, but they imagine that our Constitution requires it. It doesn’t. Congress refuses to perform its constitutional duty to regulate commerce because Republicans throw tantrums and Democrats roll over and play dead. Even President Obama appeases the Republithugs at every opportunity. The misinformation, hypocrisy and blatant lies are so deeply ingrained in America’s psyche that it’s too late to eradicate them. We have to start over. We should begin by raising tax rates on corporations and the wealthy, closing tax loopholes and enforcing sensible regulations. We should demand that future corporate and political leaders exhibit the virtues of human decency, honesty, integrity, common courtesy, common sense and justice. We should create a new brand of capitalism based on new principles:

— Capitalism is one part of a multifaceted economy.
— Blind allegiance to the bogus principles of classical economics will end.
— Capitalism isn’t a zero-sum game. There’s ample money for everyone.
— Profit is not the sole raison-d’etre for all endeavors.
— Employers respect employees’ skills and capacity to contribute to the workplace, and their lives beyond work.
— Both employers and employees are entitled to promote their respective common interests through various channels, including chambers of commerce, trade associations, labor unions and beneficial associations.
— We all must pay for the things we use. Our taxes pay for the things that government provides.
— Because humans sometimes behave dishonorably, government will regulate commerce and the economy.
— “It’s only business” is not a valid excuse for unethical behavior.
It will take time to see results, but we’ll be in worse shape ten years from now if we do nothing.

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Tony Molho (Florence, Italy): American capitalism cannot survive two burdens that have plagued it for decades: mindless military interventions that drain the treasury of funds badly needed for other needs and a fiscal structure that places inordinate burden on the middle and lower-middle classes while those with incomes of more than $1 million per year pay a proportionately smaller share of their income to the government. Reduce military spending and shift the tax burden to those who should bear it, and there should be abundant resources for education, infrastructure and medical care. American capitalism would thrive if people regained a sense that government treats them equitably and fairly.

Edward Kamau (Dayton, OH): Reforming capitalism is about making the largest corporations, their officers and directors accountable to society and their stakeholders. This entails fostering a culture of social responsibility among these companies. I would achieve this by requiring three principal reforms among the largest 1,000 public corporations defined by revenues or number of employees. I would create a classification system, from “A” to “F” corporations: “A” corporations would be required to meet the highest standard of social responsibility. In return, they would pay lower taxes, avoid double taxation, enjoy greater liability protections, access to financial credits, etc. “F” corporations—those with histories of poor or irresponsible conduct—would be subject to tighter regulation, higher taxes, decreased liability protection, etc. To increase personal accountability for corporate officers and directors I would require that directors and officers be licensed and meet high ethical and legal standards. This would include making their professional histories public and the possibility of revoking their license. Further, to increase board independence, no corporate officer would be permitted to cast a proxy vote within his or her own company. Any proxy vote not specifically assigned by the shareholder would be held outside the company by a designated trustee with a duty to vote in the best interests of all stakeholders. Trustees would be selected by lottery from a large pool of independent, nonprofit and nontrading proxy firms. Finally, I would create a national ombudsman to rate the performance of these corporations. This ombudsman would create a single public record for each corporation, its officers and directors, including lawsuits, regulatory actions, complaints, material business actions etc. This record would be used to rank each corporation “A” through “F.” By means of incentives and punishments, these reforms would foster a culture of social responsibility amongst the largest public corporations. These corporations would be judged by performance against the requirements of their particular classification with resulting costs or benefits. Corporate officers would no longer control their boards, allowing the boards to become independent while officers and directors would face greater public accountability. I believe such a system is long overdue and would serve to create a capitalist system that would benefit all of society.

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Joseph Boyett (Alpharetta, GA): If we want vibrant capitalism that works for all Americans and not just a few, then we need strong unions. In 1935 FDR signed into law the National Labor Relations Act, also known as the Wagner Act. In their book Labor in America, Foster Rhea Dulles and Melvyn Dubofsky say this about the importance of the Wagner Act to working Americans: "For the first time in American history, a national administration was to make the welfare of industrial workers a direct concern of government and act on the principle that only organized labor could deal on equal terms with organized capital. Heretofore, America tolerated labor unions; now they were to be encouraged… Age-old traditions were smashed; new and dynamic forces were released. Never before had as much economic and political power seemed within the reach of organized labor. The struggles, hardships, and defeats of a century appeared to have culminated in the possibility of complete attainment of workers’ historic objectives." Within just a dozen years of the passage of the Taft-Hartley Act, antilabor forces were able to undo practically all that labor had accomplished with the Wagner Act. Unions have been in decline ever since, as have incomes of working Americans. If we want to fix what is wrong with American capitalism, the best thing we could do would be to reaffirm our commitment to American workers by passing a new Wagner Act that will once again put government on the side of the workers and affirm its support for the principle that organized labor is critical to ensuring that all Americans share in the benefits that a strong, vibrant capitalist system can bring.

Lynn Ochberg (Meridian Township, MI): I would follow the example of the 3,000 small-scale entrepreneurs in my township of 39,000. These 3,000 work in their homes! Some have multiple businesses. I operate a business called, LynnO’s Maple Goodies, utilizing the new Michigan Cottage Food Law, and sell my goodies at our local farmers’ market. We save overhead by using our own homes for offices, manufacturing centers, consultation rooms, software development sites and many more functions. My colleagues and neighbors are keeping our local foreclosure rate at one-third the average for the state of Michigan with our local entrepreneurial spirit. As an elected township trustee I am constantly looking for tweaks to our ordinances to facilitate these local small-business initiatives. This could be a model for folks all over the nation. It really builds community spirit as well as economic success.

Carl Clark (Citrus Heights, CA): I would create a "baby birth fund" to give every newborn child a sum of money that would sit in an account until the child reaches a specified age of maturity. This fund would collect interest, which would be used for educational and health expenses, during the age before maturity. This way all children would start out in an equal way economically. The program would be funded by the removal of any inheritance. All money at death would revert back to the baby birth fund.

Roman Montero (Los Angeles, CA): The German "co-determination law" is a great place to start: half of corporate boardrooms of companies over fifty employees must be representatives of labor. With that type of law, extra profits will mean higher wages; downturns will mean shared sacrifice; and an executive won’t be able to ruin a company, get a golden parachute and then lay off half the workforce. That will majorly change capitalism for the better.

Glenda Carper (Normandy Park, WA): I would put great emphasis on achieving public campaign financing to reduce the influence of money in our elections and allow a wider variety of people to run for office. That would hopefully make our elected officials much more responsive to the general public and interested in the common good. Leaders who talk about the common good being in the interest of all and a goal of all are greatly needed! There is way too much ideology and false hope in everyone doing their own thing and taking care of themselves. We are in this world together and can make it work only by working together.

Neil Moffatt (Cardiff, Wales): I would recommend a migration from company ownership by people (shareholders) who have nothing to do with the business to one where they have a vested interest. Well run cooperatives have been shown to be more effective than traditional businesses and certainly than corporations, with happier and more productive staff and better-value products since there are no shareholders to pay. And I would recommend a government-seeded initiative to change the underlying ethos from one of constant growth to one where each company seeks to reach an optimal size. This would require government regulation to address any inappropriate growth—for example, to ensure a diversity of retail outlets from one city to another.

Paul DeFalla (Santa Barbara, CA): First of all, corporations are not people. They are associations that are granted certain privileges in return for following certain rules. Since their primary purpose is to make a profit, and their profit may sometimes be at the expense of citizens, both their privileges and their rules must be carefully regulated by the citizens who stand to suffer from corporate abuse. 1) Owners of corporations cannot enjoy immunity from the crimes their companies commit. 2) Corporations must not be able to contribute to political campaigns of any type. 3) Corporations must pay taxes at the same rate as would an individual, based on income, except as noted in #6. 4) Corporations may not engage in monopolistic practices. 5) Corporations must make no effort to restrict or prohibit union activity. 6) An executive of a company may not make a salary exceeding twenty times the salary of the company’s average employee, and the corporation will be assessed a windfall profits tax on any annual profit amount that exceeds the total annual earnings of the nonsalaried employees combined.

Nick Krafft (Washington, DC): As long as capital remains pre-eminent, we cannot remake capitalism. Instead, we need to gradually remake economic structures to chip away at capital’s power. Giving workers stock ownership is one small step, but giving workers complete control over their enterprise is a more radical, fruitful step. It would mean that production and consumption would be more tightly linked, as the amount one consumes would be more in line with what one produces. Lavish consumption would not disappear entirely, but would be made scarce. Remeasuring economic value to include environmental externalities is another small step, but forcing these externalities into pricing through democratically decided taxes is a larger and more fruitful step (and I guarantee, a worker-run Chamber would fight it a lot less). These steps must be supported by increased class consciousness through education. The value of worker ownership and environmental stewardship are obvious to their beneficiaries; demonstrating that capital’s dominance stands in the way of these benefits is critical. A class-conscious society will support economic structures that value labor and nature, not just profits. Changing capitalism does not mean removing markets or destroying property but rather reshaping production and consumption markets so economic value is not distorted.

Proposals for June 28:

Debbie Niemeyer (Augusta, GA): I would start with sufficient on-the-job training (OJT). If the national government made a substantial investment in various industries—whether finance, technology venues (many of which are currently outsourced), green energy, etc.—a number of unemployed, underemployed, working poor and recent college grads would be able to fill positions instead of wasting their talents and efforts. More candidates for OJT would gain more knowledge and competitive skills—which in turn could alleviate the high cost of unemployment and a swelling working poor sector. Local governments can make policies that would make OJT positions available and compel college grads, younger and older, to apply for them. Unfortunately, there aren’t many OJT programs across the United States. Both big and small businesses would need incentives and support from government at the national and local level to set them up. OJT programs would help an increasing number of young college grads get a jump-start on a rewarding career with a reasonable salary. And many older Americans, including those who are stuck with uncompetitive degrees and without much income to help pay for additional college study (especially those with student loans and defaulted loans), could get a second chance through the OJT sector—which could yield a reasonable salary or wage.

Gary Hatten (Kettering, OH): Demolish and outlaw conglomerates and monopolies; create democratic workplaces where workers share all decision-making with management; establish profit-sharing for all workers in the private sector; community support for small business and entreprenueral startups; encourage and stimulate the development of worker-owned businesses; smaller bank systems that are dedicated to the development of their communities; a progressive tax system that eliminates instant millionaires/billionares; healthcare, public services, education should not be marketplace commodities but given to everyone; full employment for everyone willing to work even if adjustments have to be made, e.g., thirty-hour workweeks/six-hour workdays; aggressive consumer protection; take money out of politics at all levels; aggressively pursue and penalize perpetrators of economic crimes against the community; make business and industry responsible for damages to the environment; ensure fair/stable retirement systems; make homeownership a real possibility for everyone willing to work full time. I’ve just started but am running out of words.

Matthew Abely (San Jose, CA): The one thing I would do to change capitalism to get it to work for the people (if that is even possible) is simple: the Constitution needs to be amended to declare that corporations are not people. The people who run corporations should not have the right or the ability to cause untold damage and harm to other people poorer (in money and rights) than them, and then be able to hide behind the mask of "I didn’t do it; the corporation did—I’m just a shareholder." The elites of this country must be brought to justice for their crimes. The next step is to take this amendment to the world.

Richard Peet (Leominster, MA): There can be but one rational conclusion: the United States and the Western countries can only reindustrialize under a completely different environmental regime, one in which the state regulates directly rather than through carbon markets. So we need Green Reindustrialization that involves tariff protection, subsidiies, planning, direct government intervention, worker and consumer participation. This would do the following things: use capital productively instead of destructively; increase good-quality, worthwhile employment and reduce unemployment; and save the environment so that future generations might live.

Proposals for June 26:

Theresa Klein (Tucson, AZ): I would return to basic principles such as "equal justice under law" to create rules and regulations that are simple and uniformly enforced for all market participants. No individual, company or market actor should be favored by the government or should be able to use political influence to gain a market advantage. Second, I would modify existing regulations regarding corporate liability so that liability for criminal negiligence (as opposed to financial debts) would not be limited. This would make stockholders and corporate officers more cautious when it comes to engaging in activities that pose an environmental or public health risk. Third, I would create a new campaign finance regulation, in accordance with SCOTUS rulings, stating that no entity (corporate or otherwise) that is dependent on government funding via contracts, subsidies, bailouts or tax credits may donate to any political campaign, political organization, PAC or other entity, nor may it advocate directly for any candidate or in any other way attempt to lobby for the continuation or increase of the funding it receives.

Mary Beth Mauer (Jackson, OH): There are several ideas that I would incorporate in a reimagined capitalism. All manufacturing processes would be required to be analyzed for sustainability. Those processes that do not meet the sustainability principles would have a surtax imposed in order to pay for the downstream costs that are not figured into the price of the goods. Corporate executives should not be allowed to make more than twenty-five times what the average employee makes. The income of management would include stock options, deferred income, etc. that comes from the corporation. All jobs can be shared by two individuals who make half the wages but full benefits. Capital gains taxes would be progressively taxed in the same manner as income, since capital gains is income. Social Security taxes would be assessed up to the first $125,000 of income, increasing by $1,000 per year indefinitely. All derivatives and high-frequency trading would be outlawed.

Bill Sawyer (Winter Garden, FL): I have three recommendations. One, remove businesses’ ability to hide or obscure their activities. If a state government, like Florida, can do all of its business completely in the open, there is absolutely no reason why businesses cannot implement such transparency. The playing field would be level because all businesses would be forced into the same openness. Two, stop treating corporations as individuals. They are not individuals. They are run by a collective of executives, and those executives should be held accountable for the corporation’s activities. Regulations that hold executives accountable for reporting need to go farther, especially in tax laws. Three, businesses should not be allowed to pay their executives more than a small multiplier (say, twenty or thirty times) the lowest-paid person in their company. This should include temps and other agreements and should relate to the entire cost of the compensation package, including all benefits and stock options. There is absolutely no connection between CEO pay and performance. It is a myth.

John Shea O’Donnell (San Francisco, CA): My proposal is to limit the accretion of wealth to $250,000 per annum (indexed at 2011) for the expected natural lifespan of an individual, with dollars in excess of this maximum to be placed in the federal treasury. The plan would be phased in over a twenty-year period, beginning with a 10 percent reduction in incomes over $250,000. Each subsequent year would see a steady reduction in wealth consolidation until the goal was gradually reached. Individuals would be able to retain their wealth in so much as it does not exceed $250,000 per annum for the rest of their natural expected lifespan. The amount would be adjusted annually corresponding to the real dollar index. In this way, we would still respect the concept that an individual had already earned $250,000 per year, though they would be responsible for maintaining their wealth and would have no assurance that it would not decline. Finally, the dollars placed in the federal treasury would not be permitted to grow federal expenditures because a real dollar limit on federal expenditures would be placed on the budget requiring a 66 percent vote of Congress and signature of the president to adjust. Any revenues exceeding expenditure would be placed in a "rainy day" fund of up to 50 percent of any one annual budget, with the rest being returned to taxpayers.

Proposals for June 21:

Charles Smith (Lady Lake, FL): The current state of capitalism in the United States favors the rich at the expense of the poor and middle class. To alleviate this we need to redistribute wealth. The only feasible way to do this is through taxes, which should be levied based on ability to pay. For example:

No deductions allowed for individuals or special-interest groups. Also, to ensure the financial health of Social Security, no cap on maximum earnings, so you would continue to pay Social Security no matter what your income.

Chris Crabbs (Glendale, AZ): We need a two-pronged approach. One, remove moneyed interests from good governance. We need to eliminate the ability to buy elected officials, bribe judges and take over political discourse. Two, make corporations’ interests align more with the interests of long-term shareholders and with the long-term economic health by deferring compensation. Corporations are largely managed by selfish people who have been trained to extract the most money from a situation in the short term. Thinking about the common good or long-term goals is often contrary to their quarterly evaluation process. Companies should be forced to defer compensation—say, for five years at 20 percent per year. Compensation should be tied to real gains in the company’s health instead of fictional goals, and we should allow for clawbacks when corporate fraud is discovered.

Pat Guttmann (Mokelumne Hill, CA): I would propose an amendment to the US Constitution similar to the "Law of Mother Earth" bill proposed by the Bolivian government. The law states, "Mother Earth is a living dynamic system made up of the undivided community of all living beings, who are all interconnected, interdependent and complementary, sharing a common destiny." If a corporation can be legally considered the same as a human being, then nature should also have rights. If we based all of our civic and business activity on the "Law of Mother Earth" and held that up as a guide, we would be happier and more profitable, and our country would be sustainable. If we followed these principles, we would not have a boom-and-bust business climate, and there would be no burst bubbles in this country.

Proposals for June 20:

Jeffrey Medley (Atlanta, GA): I believe capitalism can work, but we need a decent safety net. If we could just fix the healthcare system alone (socialized or single-payer only), we could take the burden of providing healthcare away from businesses. This would allow them to hire more people. It would also allow more people to start their own businesses or work for small businesses that do not currently provide healthcare. My company outsourced most of the jobs that used to be here to India. I am sure that the cost of healthcare was part of the reason. We really need to fix this problem. Obama did not do it.

Richard Schroeder (Freeport, NY): Severely reduce all government subsidies to parts of the country with low population density. That means less public funding for things like highways, cars and home mortgages. Instead, pay for a massive remodeling of urban centers—expansion of public transportation, beautification, public housing, rent controls and rent assistance, mortgage assistance for condominiums, daycare centers, etc. Institute congestion pricing in every city; punish travel by car and reward walking, biking and public transportation. Essentially turn every city in the United States into Moscow or New York. Living in a city would become much cheaper and easier, and living in suburbs much more expensive and difficult.

James Palmer (Burlington, VT): The proposal is simple: establish large tax benefits for the family (or small) business and remove the tax benefits for other forms of capitalism. We are often told that the creative power of the economy is small business, so why do we structure our economy and government to benefit large business? We are taught family values, but then we create a situation where adults must work several jobs at near minimum wage to support their families. In The Netherlands such a system of tax benefits is accompanied by other family-friendly regulations. A family business cannot be open for more than about forty hours a week—there must be time for the family to nurture itself. There are also limits to the number of employees.

Proposals for June 17:

Jim Myers (Tujunga, CA): 1). Eliminate the fiction of corporate personhood/rights. Individuals in executive positions are responsible for their own decisions, and public corporations are responsible to the public for their behavior. 2). Certain material responsibilities naturally devolve to government. Police, fire protection, housing code, traffic, road building and maintenance are the most obvious. Others need to be included among the things that are best left to government to provide, so long as we the people continue to insist on transparency and a voice in the decisions; healthcare, education, research and development of new technologies, and protection of the environment for all of us and our children. 3). Banking regulations that support a strong middle class. The foundation of our prosperity in the mid-1900s was our strong middle class. Deregulating the banks allowed them to slowly strip our wealth and make us a debtor society. A strong consumer protection agency can help fix that.

Betsy Phillips (Winston Salem, NC): I believe that Congress should concentrate on actually providing jobs, not giving money to people (as in tax cuts) hoping that they will create jobs—we need manufacturing and infrastructure jobs. The government would be better off giving money to companies that provide new jobs while building up our infrastructure and manufacturing base at the same time. They could do it by allowing companies to use unemployed people (while the government is paying their unemployment) or by giving specific companies money to do a specific job, making the company show how many new jobs they will provide with the money. Another way they could help both companies and people is to pay the wages of people when a new job is created. The military should create manufacturing jobs here in the United States and not outsource these jobs. They should penalize large corporations that do not provide a certain amount of new jobs each year.

Jonathan Czarnecki (Monterey, CA): If I were able to fundamentally reinvent capitalism, I would include three changes: 1). Eliminate the legal “personage” of the corporation and replace it with a generalized legal organizational entity, with limited rights and privileges. 2). Establish “sunshine” clauses in all company charters requiring full public disclosure of finances using a very liberal GAAP [generally accepted accounting principle] standard, regardless of whether companies are public or private. 3). Establish within GAAP the requirement to account for future costs and impacts in the present; that means no more discounting the future for present-day profits. That’s a start!

Tom Giller (Scottsdale, AZ): Certain industries need a dose of socialism or at least hard, firm regulation and statutory prohibition of lobbying efforts. Those industries are banking, energy and healthcare. These businesses are more necessity than preference to the average person, where the companies’ financial gain is the average families’ loss. Additionally, commodity futures markets must be free of speculators as compared to end users. Airlines, for instance, could buy jet fuel (oil) futures, but hedge funds could not, since their profit is the consumer’s loss. Finally, tax codes need to be revised to be fair for all and progressive in nature. One feature that is particularly bothersome is the deductibility of advertising costs by pharmaceutical companies. They are creating demand for their products (especically offenve ED drugs) whether or not there is a public benefit. Same goes for the energy industry. If I see another ad for the benefit of the natural gas industry to America I will barf. Thou dost advertise too much!

Andrea Summers (Montreal): Finally acknowledge that the cold war is over and repatriate all overseas US forces, with the one exception being Korea. Slash military funding by 50 percent and start to invest the money saved into universal healthcare and support for vulnerable children. Legalize all banned drugs and criminalize all secret financial transactions by institutions carrying on business in the United States. None of this will happen, however, without first ending the power monopoly of the two pro-business political parties, the Democrats and the Republicans.

And we’re still taking proposals. Send us your succinct ideas—not more than 400 words please!—by July 4. We’ll publish additonal forums with elaboration and annotations for the most imaginative ideas.